Since digital signage content may be frequently and easily updated, and also because of the interactive abilities available through the accompanying employment of real-world interfaces such as embedded touch screens, movement detection and image capture devices which enable these forms of signage to understand who and how users are interacting with them, they are gaining acceptance as an alternative to static signage.

One specific use of digital signage is for out-of-home advertising in which video content, advertisements, and/or messages are displayed on digital signs with the goal of delivering targeted messages, to specific locations and/or consumers, at specific times. This is often called "digital out of home" (DOOH)H.[1]

Images - Scrolling images, usually in the format of digital advertisement posters

Video - Usually in the format of commercial TV advertisements.

Interactive interfaces - Combining with Touch Screen and Kinect Sensors, it allows two ways communications with the users. It help to engage users and also helps advertisers to gain insight in customer behaviours.

Content Creation - Traditionally content designs are typically done through specialist firms. However they are often deemed as expensive and have uncertain ROI.[2] Nowadays, digital content can be created easily via Content Management System. Its control panel has built-in tools which allow advertisers to combine audio, video, image and interactivity easily by themselves.

In many digital sign applications, content must be regularly updated to ensure that the correct messages are being displayed. This can either be done manually as and when needed, through a scheduling system, using a data feed from a content provider (e.g. Canadian Press, Data Call Technologies, Bloomberg LP, Thomson Reuters, AHN, Screenfeed), or an in-house data source.

Digital signs rely on a variety of hardware to deliver the content. The components of a typical digital sign installation include one or more display screens, one or more media players, and a content management server. Sometimes two or more of these components are present in a single device but typically there is a display screen, a media player, and a content management server that is connected to the media player over a network. One content management server may support multiple media players and one media player may support multiple screens. Stand-alone digital sign devices combine all three functions in one device and no network connection is needed. Digital signage media players run on a variety of operating systems including Windows, Linux, Android and IOS.

LED matrix displays often use modular display components, to allow for varying sizes and shapes of displays, and to make assembly and construction easier. A modular display consists of two parts:

display matrix modules (8x8 pixels, 16x16 pixels, 8x16 pixels, etc.)

display matrix controller

For example, a variable-size display may use modules 16 LEDs wide and 16 LEDs tall. To construct a display 64 pixels wide and 32 pixels tall, the display is built using a construct four modules wide and two modules tall. To correctly align the individual modules, either a support frame is used or the modules are joined together along the edges.

Digital sign displays may be LCD or plasma screens, LED boards, projection screens or other emerging display types like interactive surfaces or organic LED screens (OLEDs). New technologies for digital sign are currently being developed, such as three-dimensional (3D) screens, with or without 3D glasses (see Anaglyph image and Autostereoscopy), 'holographic displays',[3] water screens and fog screens.[4]

Some queue management systems use the split screen technology to combine queue management with digital signage. The required calling information attracts the attention and the adjoining video message benefits simultaneously. The resulting synergy is an inherent part of customer experience management (CEM) strategies.

Rapidly dropping prices for large plasma and LCD screens have led to a growing increase in the number of digital sign installations.[5] Another price-related benefit that is allowing a larger group of businesses to install digital signs is the increasing availability of newer LCD and plasma display brands in the market. Many users have opted to forgo more expensive brand-name displays in favor of more affordable displays from less well-known companies.[citation needed]

Digital audiovisual (av) content is reproduced on TVs and monitor displays of a digital sign network from at least one media player (usually a small computer unit, but DVD players and other types of media sources may also be used). Various hardware and software options exist, providing a range of different ways to schedule and playback content. These range from simple, non-networked portable media players that can output basic JPG slide shows or loops of MPEG-2 video to complex networks consisting of multiple players and servers that offer control over enterprise-wide or campus-wide displays at many venues from a single location. The former are ideal for small groups of displays that can be updated via USB flash drive, SD card or CD-ROM. Another option is the use of D.A.N. (Digital Advertising Network) players that connect directly to the monitor and to the internet, to a WAN (Wide Area Network), or to a LAN (Local Area Network). This allows the end user the ability to manage multiple D.A.N. players from any location. The end user can create new advertising or edit existing advertisements and then upload changes to the D.A.N. via the internet or other networking options.

Developments in web services have meant the APIs for some digital sign software now allow for customized content management interfaces through which end-users can manage their content from one location, in a way which suits their requirements.

More advanced digital sign software allows content to be automatically created by the media players (computers) and servers on a minute-by-minute basis, combining real-time data, from news, to weather and prices, transport schedules, etc., with av content to produce the most up-to-date content.[6]

Whenever the display, media player and content server are located apart there is a need for audio-video wiring between the display and the media player and between the media player and the content server. The connection from media player to display is normally a VGA, DVI, HDMI or Component video connection. Sometimes this signal is distributed over Cat 5 cables using transmitter and receiver baluns allowing for greater distances between display and player and simplified wiring. The connection from media player to content server is usually a wired Ethernet connection although some installations use wireless Wifi networking.

Digital sign can interact with mobile phones. Using SMS messaging and Bluetooth, some networks are increasing the interactivity of the audience. SMS systems can be used to post messages on the displays, while Bluetooth allows users to interact directly with what they see on screen. In addition to mobile interactivity, networks are also using technology that integrates social and location-based media interactivity. This technology enables end users to upload photos and messages to Twitter and Facebook as well as text messages to the displays.

Lately, mainly due to the fact that Smartphones are widely spread, we can witness adoption of new technology known as SSI (Screen–smart device interaction), that allows smartphone holder to interact directly with digital signage screen: participate in a poll, play a game, or shared social network content.

While the term "digital sign" has taken hold throughout most of the world, some companies and organizations prefer to use the terms "narrowcasting", "screen media", "place-based media", "digital merchandising", "digital media networks", "digital out-of-home" or "captive audience networks".[citation needed]

China currently leads the world in the number of digital sign displays deployed and number of NASDAQIPOs, with the country's biggest digital sign firm, Focus Media Holding, alone operating more than 120,000 screens. Total revenue from the digital sign equipment market in the United States – including hardware, software, installation, and maintenance—is expected to grow by about 33% in 2009.[7] Another source for information on digital sign displays and impressions (the number of times a viewer reads/views digital sign), is a report provided by Nielsen, the "4th Screen Network Audience Report". In it Nielsen identifies that digital screens in the "fourth screen" category in the US generated over 237 million monthly exposures to persons 18+years or older,. The report identifies Screenvision, NCM, Captivate, GSTV and IndoorDirect as among the companies that are leaders in the fourth screen category. One of the leading digital sign companies in movie theaters is Screenvision, with over 14,400 screens in the US; another leader in the "fourth screen" marketplace is GSTV (Gas Station TV), which reportedly generates over 32 million digital sign impressions every month. Nielsen estimates these 237 million+ exposures translate into more than half (54%) of the adult population being exposed to a place-based video ad during the period measured.[8]

Digital signs are used for many different purposes and there is no definitive list. However, below are some of the most common applications of digital sign:

Public information – news, weather, traffic and local (location specific) information, such as building directory with map, fire exits and traveler information.

Menu information – pricing, photos, ingredients, and other information about the food(s) being offered, including nutritional facts.

Advertising – usually either related to the location of the sign or using the audience reach of the screens for general advertising.

Brand building – in-store digital sign to promote the brand and build a brand identity.

Influencing customer behavior – directing customers to different areas, increasing the "dwell time" on the store premises, and a wide range of other uses in service of such influence.

Enhancing customer experience – applications include the reduction of perceived wait time in the waiting areas of restaurants and other retail operations, bank queues, and similar circumstances, as well as demonstrations, such as those of recipes in food stores, among other examples.

Enhancing the environment – with interactive screens (in the floor, for example, as with "informational footsteps" found in some tourist attractions, museums, and the like) or with other means of "dynamic wayfinding".

The ITU published a whitepaper [9] in which SMIL is cited as "a key standard for the digital sign industry," and that SMIL "is increasingly supported by leading digital sign solution providers."

It is reported[10] that SMIL players are deployed for nearly 100,000 screens in year 2011, and a single software maker has won three major projects each deploying more than 1,000 SMIL players in the same period. In 2014 SMIL is cited[11] as the key technology behind a single project of 7,500 players driving 15,000 displays, probably the largest single-project deployments known to the industry.

POPAI has released several digital sign standards [12] to promote "interoperability between different providers". The objective of these standards documents is to establish a foundation of performance and behavior that all digital sign systems can follow. The current set of standards published by POPAI are:

Digital sign in the broad sense has been in use for decades in the form of LED ticker signs and LED video walls. However, despite its recent growth it has yet to become a major public medium, due in part to the following negative factors:

Uncertain ROI – the costs of deploying digital sign can be high. Large outdoor screens are expensive - but the much more common, and much cheaper, digital signs based on LCD screens can still represent a significant investment when a large network is planned: the cost of installing one screen in, say, each restaurant in a large fast-food chain could run to millions of dollars. An investment of this magnitude has to be justified by a clear ROI plan before receiving approval.

Lack of interoperability – digital sign products today are mostly closed, proprietary systems. It is difficult to advertise across digital sign networks running different solutions, making the emerging media inferior to nationwide advertising media such as television and the Internet. Due to the lack of a common communication protocol, products from different vendors do not mix, making digital sign systems expensive to build and hard to expand.

Lack of understanding - despite considerable media coverage there remains a general lack of understanding about the requirements for the successful use of digital sign. Problems arising from this include poor content and improper type or location of screens.

Lack of Content - In the cases where understanding is clear and a value proposition is well defined, many organizations overlook content. Fresh, dynamic content that is attractive and engaging to the user at the time and place where the Digital Signage display is located is a critical component to the success of Digital Signage. Failure to understand and plan for content is one of the biggest issue in the industry.[13]

These issues are being addressed today in the following ways:

Understanding the ROI – studies have shown digital sign to be effective in aiding customer recall and retention of displayed information[14] in large-scale merchandising applications, especially taking into account the downward trend in LCD panel and playback device prices. Today a small-scale retail or restaurant digital sign installation can be implemented for just $1,500-2,000 using inexpensive SaaS tools, and ROI may be realized quickly. One of the best ways to make the case for implementing a digital strategy is to calculate the ROI or ROO upfront. Determine what the goals and objectives are for the digital sign – is it to increase sales at point of purchase? Can it be used to improve lead generation or build brand awareness? Thus, knowing how to calculate the ROI of digital sign [15] is very important.

Open standards for digital sign – industry organizations including POPAI (Point-of-Purchase Advertising International) and OAAA (Outdoor Advertising Association of America) are actively developing and promoting technical standards that will make it possible to communicate across digital sign networks made by different vendors. Interoperability across systems and media players is increasing competition in the supply chain, significantly lowering costs and making the ROI on building networks vastly more attractive.

Value chain consolidation - business entities have been formed to consolidate segments of the long value chain. Display units with built-in media players, content design agencies which also provide hardware and support, as well as management software which allows advertisers to manage a whole sign network are examples of how the industry is coming to work together and consolidate.

Understanding the industry - there are a significant number of trade shows with conferences as well as specialized conferences and also more informal training and briefing sessions all focused on aspects of digital sign. There are also more user friendly products available which are plug and play and don’t even require scheduling software.